Bain Capital, Blackstone Capital Partners and ABRY Partners are among the 50 most sought-after US buyout funds on the secondaries market, according to Toronto-based secondaries advisor Setter Capital.
The firm produces a ‘liquidity rating’, which is based on a number of factors, including a fund’s popularity/number of followers on SecondaryLink, Setter’s online platform for market participants to track 7,000-plus funds and share due diligence. Setter then looks at the likely number of prime buyers and gives each ‘family’ of funds a rating based in part on the seriousness, capacity and number of interested buyers, as well as the likely ease of transfer.
“More and more primary investors are starting to consider how liquid a potential investment is,” says Setter founder Peter McGrath. “If a fund is more obscure, not as sought-after, this potentially increases liquidity risk – [so] if you later choose to sell, you may have to wait weeks or months for bids, and those bids may be few and far between. This ultimately would diminish negotiating power.”
Of its top-50 US buyout funds list, Setter rated 24 funds as ‘excellent’, 15 ‘very good’ and 11 ‘good’. McGrath said the average top price received for those funds in the first category (right) was approximately 103 percent of their most recent NAV mark.